My company is in a free zone — what exactly is a VAT "designated zone"?

Not every free zone qualifies as a VAT "designated zone." Article 51 of the Executive Regulations sets four conditions that must all be met together: the area must be a specific, physically fenced geographic zone; it must have security measures and customs controls monitoring entry, exit, and the movement of goods; it must have established internal procedures for storing and handling goods; and the zone operator itself must follow the FTA's mandated procedures. Miss any one of these and the area is treated exactly like anywhere else in the UAE for VAT purposes.

Where a zone does qualify, supplies of goods within it generally fall outside the scope of VAT — unless the goods are actually "consumed" there, a term interpreted broadly to cover any use, deployment, or exploitation of the goods. Moving goods from the mainland into a designated zone is treated as a standard domestic supply, not an export; moving goods out of the zone into the mainland is treated as an importation and triggers import VAT. Services, however, are always treated as supplied within UAE territory regardless of the zone — meaning normal VAT rules, including reverse charge on imported services, apply just as they would anywhere else. RASEEKH helps free zone businesses map out exactly what falls inside the zone's special treatment and what doesn't, before it becomes a filing error.